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Today, customers are informed. They know what your competitors have to offer because our digital world makes comparisons easier than ever. This poses a significant challenge to your business—if you don’t offer your customers much value, it’s only a matter of time before they have moved on.

Customer relationships are just like dating: customers will stay with a brand that makes them feel appreciated! How you serve them, their experience with your business and how satisfied they are after each experience with you, are some of the factors that they consider. If they do not believe they are a priority, to them you will be their last option. Of course, as a business owner, your dream is that anytime a customer thinks of a product or service, they think of yours first. To make this a reality, you need to understand the importance of customer loyalty.

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What is customer loyalty? Customer loyalty definition

Customer loyalty measures the willingness of a customer to do repeat business with you. It can also be defined as a customer’s devotion to your products, services or brand. It is the result of a level of satisfaction with what you offer the customer; their experience when dealing with your brand; and the value of the goods or services you offer them. To drive customer loyalty, your brand must consistently meet and exceed your customers’ expectations.

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The Importance of Customer Loyalty

Customer loyalty is crucial for many reasons. Let’s dive into the most significant customer loyalty benefits:

Customer loyalty promotes business growth.

For your business to make profits, it means your revenue is more than your expenditure. Repeat customers will buy for your business more than new customers—65% of your sales will come from loyal existing customers. It is also easier to upsell or cross-sell to repeat customers as their customer portfolio grows, meaning a greater sales volume is guaranteed for your business. In addition, loyal customers are a lot more likely to refer your business to potential customers, hence lead generation becomes easier for your business which can highly boost your business growth.

Customer loyalty boosts your brand image.

Brand image is an important aspect of any business. It’s is how customers perceive your products and services and how they feel about them. If customers are satisfied with your services, they will portray your brand positively and are likely to be your brand advocate or brand ambassador, hence improving your brand image.

Customer loyalty provides a competitive advantage.

Customer loyalty helps you stand tall from your competitors. If you all are offering the same product or service, customer loyalty will help you to win. The basis of this is the trust that your customers have in you as a brand.

Customer loyalty reduces the cost of marketing, through referrals.

In today’s world, word of mouth is a highly trusted marketing tool. Customers are highly likely to trust in your business if their friends or families already trust your brand. So when referred, these leads are easily converted to customers. Referrals are a cost-effective way of marketing your brand, and loyal customers are more likely to refer their friends.

Customer loyalty drives both customer retention and acquisition.

Harvard Business Review reports that it is 5 to 25 times more expensive to acquire a new customer than it is to retain an existing customer. And we can’t emphasize enough that satisfied existing customers are more likely to refer their friends. In addition to this, referred customers are more likely to stick with your business than non-referred ones, and have a higher customer lifetime value on average. So, why not focus your attention on providing a better experience for the existing customer, so that you can reduce the cost of acquisition?

Customer loyalty helps you make accurate sales forecasts.

Making accurate sales forecasts is important for every business. With a loyal customer base, this becomes easier since you have overtime collected data on their spending and behavioral patterns. Therefore you are able to draw more accurate financial projections on how future sales could look like. This helps you to reduce risk in regards to new product development, cash flows, and inventory.

Customer loyalty minimizes service costs.

It is more cost-effective to serve a loyal customer. The reason being they are already familiar with your products and your processes. So they are likely to try and resolve their issues on their own from the knowledge base gathered while doing business with them before requesting for your support. They are also likely to assist other customers with their issues since they have know-how from their prior engagements with you.

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How can your brand earn customer loyalty?

I hope now you understand the importance of customer loyalty if you want to remain profitable. Next, let’s look at ways of winning your customers and retaining them. There are numerous ways to drive customer loyalty; here are a few.

(For a more detailed list of ways to increase customer loyalty, be sure to read the linked article.)

Know your customers

Understanding your customers is the key to achieving your business objectives. As a business, you should strive to offer a simple, friendly and personalized service to your customers. Remember, if they don’t feel valued this could be the last time they are using your service or buying your product. Is that what you want? Of course not. Do not make an assumption about them. Get to know them.

Some simple acts of a personalized service include:

  • Know them by their name. It feels great to be addressed by your name.
  • Show them that you are aware of their special moments such as birthdays, anniversaries (including customer anniversaries), and holidays.
    • One way to do this is through email programs that trigger personalized messages to wish them well on such days. You could also offer special discounts or credits on these occasions.
  • Pick up on personal details they mention, then reference those details later in the conversation.

Whatever you opt for, it is important to make them feel valued.

Be open with your customers: let them know you

You have to be open with your customers. Is a certain service experiencing downtime or have you abruptly run out of some stock or is a new product out? Keep the customer informed. Send personalized communication to your customers. Do not wait for them to learn from the media. This will badly work against the trust you have built over time.

To make it more personalized, assign relationship managers to your clients and create a relationship building strategy. This is important to ensure new customers have someone to walk through the customer life cycle with. Also, this works well for existing customers since they have someone dedicated to engaging them personally,

Build a consistent brand identity

Establishing a brand that your customers can get behind will encourage them to remain loyal. At any time, customers expect any service from you to match what your brand promises. Remain true to this at all times and on all platforms. Keeping your brand identity consistent may be challenging, but brand identity is a key inspiration to your customer loyalty. For example, if the message on your social media platforms is not consistent with the one your website sends, then you will sow distrust in your customer’s minds. In contrast, if your message is uniform across different platforms, customers will easily resonate with your brand. Ensure every touchpoint reflects your brand message.

Encourage customer feedback

While it’s well known that it’s more expensive to acquire a new customer, we cannot underestimate the value of customer feedback from both loyal and new customers. Your attentiveness to what the customer is saying will impact their decision to come back. Customers want to feel that someone is listening to them. If you do not listen to them, they will be listened to elsewhere. Is this good for your brand?

Customer feedback gives you insight into whether your products are meeting the needs of your clients.

Encourage your customer’s feedback through live chats. Customers will easily give reviews, air their concerns and ask questions if they know that someone will respond to them immediately. Another way to encourage feedback is through social media. Always ensure you are on top of the game in engaging your customers on social media. Ensure speedy responses and use the platform to build relationships with them. Never stop learning from your customers. You will never regret this!

Prioritize customer service

To promote customer loyalty, it is important to create a customer-centric culture in your business. Crucial in this is ensuring that all staff, whether customer service representatives or support staff all embrace excellent customer service. It’s key to ensure also that customer care is a crucial aspect of your business strategy. Organize your business to focus on the needs of the consumers. Ensure that your customer service team is well empowered with the relevant tools and information to respond promptly to customer queries. Give the customer a wow experience. For more tips on improving customer service, be sure to check out our article.

Practice essentials of good customer care

To ensure customers are served well and continue being happy with your services, the following is necessary:

  • Think ahead of the customer: Identify any weakness that has the possibility of interfering with proper service or delivery. For example, make sure your inventory system is up and running to avoid disappointing the customer due to an abrupt lack of stock.
  • Effectively communicate with your customers: Make it easy for them to reach you and encourage feedback.
  • Provide personalized service: Make all communications personal so as to make the customer feel valued.
  • Offer simplicity in your services: Provide quality services to your customers. Also, ensure your processes are simple enough to save the customer unnecessary inconveniences when using your product or service.
  • Measure customer service levels: Monitor customer service key performance indicators and make adjustments if necessary.

Be the best at what you do

Do not give the customer a chance of having second thoughts about your services. Do what you promised to do and do it the best way possible. Excellence goes a long way in impressing your customers and also in earning their trust. Excellent service creates more happy customers who will keep coming back and telling others about you.

Reward loyalty: Implement a customer loyalty program

A customer loyalty program is different than a referral program. A customer loyalty program is a reward system used by businesses to motivate their repeat customers by providing incentives. The incentives could be in the form of discounts, free products, exclusive offers and experiences,  or other promotions. The intention is to offer something that will motivate the customer to keep coming back, making purchases, and performing other loyal, brand-building actions. Most businesses employ a simple point system for their loyalty program. In this case, the customer redeems the points for a menu of rewards. The system could be card-based, or, thanks to mobile technology, digital. Check out our article on customer loyalty software.

You may also implement a tiered loyalty program. In this program, the value of the reward differs depending on the customer’s loyalty. The lowest value reward is at the bottom of the loyalty ladder then it increases as customer’s loyalty goes up.

Statistics from Zinrelo showed that 57% of Americans abandoned a loyalty program as it took too long for them to earn points. On this note, ensure that whichever system you employ, it offers some benefit to the customer as the goal is to keep them motivated to come back. In the next section, we’ll examine the benefits of loyalty programs.

(Planning on starting a customer loyalty program? Be sure to follow these best practices and tips!)

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Benefits of customer loyalty programs

Loyalty programs may take time and resources to create, but once implemented, they are a great asset in boosting customer loyalty. Here are a few benefits of having a customer loyalty program:

Makes customers feel appreciated

A personalized loyalty program makes your customers get attached to your brand by creating an emotional connection. You can be sure in case of a hitch, they are likely to be more patient as they wait for the issue to be resolved.

Increases sales and revenue

Your existing customers are likely to spend more because of the incentives you are offering them. By gathering consumer-related data, you can suggest certain products to them which increases the likelihood of them purchasing the item.

Attracts new customers

Customers will be tempted to try your brand when they realize you have rewards which are easily within their reach. Also if your program offers discounts, a new customer is likely to try the product just to take advantage of the discounted offer. Loyalty programs are great for lead generation.

Reduces cost

If you invest in a customer retention strategy such as the loyalty programs, you will save on cost as the process of onboarding new consumers is altogether more expensive,

Gathers valuable data

When you request customers to sign up for your loyalty programs, you can use the data they provide to personalize customer experience and bond more with your customers. You can also use this data to prepare targeted marketing campaigns.

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Wrapping Things Up

Here’s a quote that made me think twice about customers: “There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.” – Sam Walton

Never ignore the customer’s voice. Customers use your products and services, so they know best what can be improved. This is key to ensuring that the next new customer will be a loyal one.

Jessica Huhn

Posted by Jessica Huhn

Jessica Huhn is a content writer and strategist at Referral Rock. When she is not writing, there is a good chance that Jessica is singing, arranging songs, sharing and enjoying content on social media, or hanging out with her mini Goldendoodle. She believes that it's always important to cultivate gentle strength.